National Defense Authorization Act for Fiscal Year 2019--Conference Report
Floor Speech
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Mr. LEE. Mr. President, the National Flood Insurance Program is in trouble, and everyone in this building knows it. Everyone in Washington knows it. It is fiscally unsustainable because it is by its nature structurally unsound. Yet here we are again, for the seventh straight time in just 6 years, considering a so-called ``straight'' reauthorization. ``Straight''--yes, that is the word that Washington uses. That is the word that Washington uses when Republicans and Democrats, after burning the midday oil for 2\1/2\ days a week for a few months, decide together that a dysfunctional program, $20 billion in debt, is, in fact, perfect. So we are planning to rubberstamp a continuation of its dysfunctional status quo. Swamp talk aside here, this is the opposite of ``straight.'' This is the definition of ``crooked'' and ``swampy.''
Here are the facts. The National Flood Insurance Program creates a government monopoly that insures some of the most expensive real estate in the entire world. We are talking about homes and homeowners that the private sector would be falling all over itself to insure if given the opportunity to do so. The incentives are there for flood insurance to be a vast, profitable industry, one that creates jobs and opportunity for thousands of Americans. But, no, in our unearned but infinite confidence, Congress has assured the American people: We got this. We got this. We, as in Washington. Except the problem is, we don't.
Congress's answer to private insurance is $20 billion in more debt, just a few months after receiving a $16 billion taxpayer bailout.
Why is NFIP losing money faster than Congress can spend it? Well, because the program doesn't charge policyholders market rates for insurance. It offers them a special, below-market rate despite the fact that we know floodplains are dangerous. That is why we call them floodplains and not puppy dog and ice cream plains. We also know for a fact that the subsidized premiums will lead inevitably to shortfalls, debt, and taxpayer bailouts.
Here, one might recall the old quip: ``Insanity involves doing the same thing over and over and hoping for different results.'' But Congress isn't insane. We know exactly what we are doing and why. Recall the last time NFIP was reformed. It was about 6 years ago in its 2012 reauthorization. That bill, for the first time in a long time, reined in some of the program's worst distortions. For reformers on the left and right, it was a sign of hope. The problem was, the reforms worked. NFIP and its artificially low premiums actually started to climb toward reality-based levels, market-based levels. We of course couldn't have that, so in 2014, Congress stepped in and repealed many of those same reforms that were working--reforms that were put in place in 2012. That is the broken status quo we are being asked to perpetuate today. If this bill were any more serious, it would be written in crayon. The question is, why?
If the Flood Insurance Program is so obviously and terribly flawed, why is it so resistant to reform? Why are we so resistant to reforming it? The answer is that, like most inexplicably durable programs, this is a program that quietly serves the interests of the well-to-do at the expense of working and middle-class American families.
Proponents of the program would have us believe that the NFIP is essentially there to protect innocent victims who just happen to live in low-lying communities and they can't afford flood insurance. But this argument is absurd.
First of all, if homeowners can't afford to insure their homes, then in reality they can't afford those very same homes.
Second, many of the areas Washington calls flood plains are really just property near water. Residences there are expensive for lots of reasons, but as anyone who knows anything about real estate can tell you, the biggest reason is location, location, location. These homes are expensive because lots of people want to live there, among them wealthy people who bid up the price. ``Wealthy people'' is another way of saying people who can afford high-risk insurance premiums without taxpayer subsidies covered by Washington, DC, over and over and over again.
In fairness, other flood plains are not necessarily home to multimillion-dollar beach houses, but simply normal neighborhoods in low-lying locales. But in either case, the potential for flooding makes living in these areas more dangerous and more expensive. So in both cases, it is unfair to ask taxpayers to make expensive, dangerous homes--25 percent of which are vacation homes--artificially more affordable. It is unfair, and it is unsustainable for hard-working, poor, and middle-class American families.
The failure of the Flood Insurance Program is not an economic theory; it is not a matter of ideological speculation. It is, in fact, a fact. No amount of money will change that. The problem with NFIP, as with almost all wasteful Federal programs, is not the pricetag itself but the underlying policy. It doesn't work as currently structured because it can't. Yet, despite decades of failure and folly, NFIP remains unchanged as nothing more or less than a subsidy for people to live in places we know are probably going to get flooded.
It is tempting to call this a recipe for losing money. But as we know, Federal programs never actually lose money. Whether it is waste, fraud, or abuse, someone somewhere pockets that money, and in the case of the NFIP, as with so many other government programs, the winners are--well, see for yourself.
According to the Congressional Budget Office, the median value of an NFIP-insured home is about twice that of the average American home. A 2015 study by the University of Massachusetts Dartmouth found ``an inverse relationship between insurance premiums paid . . . and total property value.'' In other words, ``The greater the average property value, the lower the average premium paid.''
Likewise, a 2016 study from the University of Michigan Law School found data ``suggesting that zip codes with higher-valued homes receive higher per-policy subsidies.''
We all know there are worthy and sympathetic beneficiaries of NFIP, as there are for every government program. But in the aggregate, in the big picture, the NFIP simply redistributes money from nonwealthy people to wealthy people, from less wealthy people to more wealthy people, and to believe otherwise is to indulge in what might be called an actuarial science denial.
This isn't alchemy. This isn't voodoo. Actuaries already know how much flood insurance should cost. Of course, they also know how much ObamaCare, Medicare, and Social Security are going to cost, and Congress is getting terrifyingly good at ignoring actuaries--and actuarial science in general. But as with our entitlement programs, politicians just want to pretend that NFIP can magically charge less, spend more, and not leave future taxpayers holding the bag.
It is long past time to set aside this farcical, magical type of thinking. Neither former President Obama nor King Canute a thousand years ago nor the NFIP today has the power to stop the rise of the oceans. What we can do is prepare--through mitigation, through insurance, and through proven platforms of success.
Senators Heller and Tester have a bill that would allow private insurers to compete with NFIP. I wholeheartedly support their bill and can cite Utah's successful embrace of private flood insurance as strong evidence in favor of that approach. Senators Crapo and Brown have a bill that would improve flood mapping and insist on community preparation for flooding as a condition of eligibility for NFIP coverage. This is not too much for the American people to ask, either of their affluent, flood-prone neighbors or of their sworn representatives in Congress. Nor is the amendment I am offering.
My amendment would leave the program--broken as it is--exactly the same, only for today's purposes with one small change. It would cap eligibility for NFIP insurance at homes worth more than $2.5 million. For anything under that, fine, they can enjoy the cut-rate premiums. But the taxpayers should not pay any amount of coverage for the top 1 percent, who can afford a new $2.5 million beach home. All my amendment says is that people who can afford a multi million-dollar waterfront home should be able to afford to insure those homes on their own, without a government subsidy paid for by America's poor and middle class.
With the stock market near all-time highs, with a corporate tax cut driving up profits, I think it is eminently reasonable to ask multimillionaires to insure their beach houses without the welfare assistance of hard-working taxpayers who make a fraction of their income.
I urge my colleagues to support this amendment. Unanimous Consent Request--S. 3128 and the Senate proceed to its immediate consideration; that the Lee amendment be agreed to; that the bill, as amended, be considered read a third time and passed; and that the motion to reconsider be considered made and laid upon the table.
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Mr. LEE. Mr. President, I stand with enormous respect for my friend, my distinguished colleague, the Senator from Louisiana. I stand also with enormous respect for the amount of care and diligence he puts into each legislative effort that he addresses in this Chamber and in the committee on which we serve together.
I wish to respond to a couple of points. My colleague is absolutely correct. Most of the people--the overwhelming majority of people who get insurance under this program--are not wealthy. It is one of the reasons this is a limited-purpose amendment. This amendment would deal only with properties, new properties, to be insured worth more than $2.5 million.
The idea is, if you can build this structure, a home, or otherwise worth more than $2.5 million, there can and ought to be a way--there is a way for you to provide for the assurance in the event of a flood, for the addressing of whatever flood damage is done as a result of that. Anyone who has the ability to afford such a structure can address that structure without having to be subsidized by America's poor- and middle-class families.
Secondly, I would like to respond to the suggestion that the purpose of this amendment is somehow to kill the NFIP program. If that were the purpose of it, we wouldn't even be having this discussion. We would simply be entertaining means by which to block their reauthorization of that program. Yes, the House of Representatives has adjourned just moments ago, but, yes, the House of Representatives has a pro forma session scheduled for tomorrow, and there are means by which the House of Representatives could and, I believe, would pass this amendment, this reauthorization, with the amendment intact.
The House of Representatives has, in fact, in the very recent past, passed far more aggressive, far more significant reforms than this, and I believe they would do so in their pro forma session by their version of unanimous consent. This is not intended, nor would it have the effect of shutting down NFIP altogether.
Finally, let me say this. Ten months ago, when we were asked to give another so-called clean reauthorization of this program, we were promised--I was promised by many distinguished Members of this body there would be reforms that we would put in place before the next reauthorization. It hasn't happened, and, in fact, we haven't had significant reforms for 6 years.
It is, in fact, time to reform the program, and, on that point, I am very pleased that my friend and distinguished colleague from Louisiana and I agree on that point--reforms are needed.
We can't continue to kick the can in perpetuity. As St. Augustine is quoted as saying during his conversion to Christianity, ``Lord grant me chastity, but not yet.''
If we are always kicking the can, if we are always saying, yes, we need to be righteous; yes, we need do the right thing, but not yet, when will we ever get there? If not us, who? If not now, when? It saddens me that we can't pass even this minor reform today.
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